‘You Can Piggyback, But You Can’t Buy the Whole Businesses’
There’s no shortage of headlines about people mimicking Warren Buffett’s portfolio and striking gold. The idea seems simple enough: Buffett buys Apple, you buy Apple. He sells a bank stock, you do the same. Why not ride the coattails of one of the richest and most successful investors in the world? On a smaller scale, it might even make sense – after all, if it worked for him, why wouldn’t it work for you?
But Buffett himself has weighed in on this strategy and the answer might surprise you. During the 2009 Berkshire Hathaway Annual Meeting, a shareholder asked a bold question: why shouldn’t investors just sell their Berkshire Hathaway shares and directly copy his moves?
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“[In terms of buying what we’re buying], others can’t buy with free float, although they may have tax advantages we don’t have,” Buffett explained, referencing the unique advantages Berkshire Hathaway enjoys due to its structure. “We don’t quarrel with those who buy what we buy. You can piggyback, but you can’t buy the [whole] businesses we do.”
His longtime business partner Charlie Munger added: “It’s generally quite smart to copy very successful investors.”
Buffett himself admitted, “I did the same thing when I was young.”
But does that mean replicating Buffett’s investments is a foolproof way to build wealth? Not exactly.
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The Pitfalls of Copycat Investing
While Buffett doesn’t outright dismiss the idea, he clarifies that mimicking his portfolio isn’t a perfect strategy. One key reason is scale. Berkshire Hathaway doesn’t just buy shares – it often buys entire businesses. This gives the company leverage, operational control and economies of scale that an individual investor can’t replicate.
Buffett’s moves are often tied to advantages unique to Berkshire, such as the “free float” from its insurance businesses. This allows the company to invest without the same financial constraints an individual might face.
Another factor is timing. By the time Buffett’s trades become public, market conditions may have shifted. You’re often playing catch-up, which means you might not reap the same benefits from the investments he makes.
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